Control of capital, even without ownership, begets income. And this is a superfluous, unnecessary feature of the system.
mbs
> Rakesh Bhandari wrote:
>
> >Not at all. We still have not explored the reasons for this mind boggling
> >centralisation of capital, the significance of the deals being mostly in
> >stocks, and the effects we can expect.
>
> One effect is that almost certainly that if the deals go bad -
> most mergers
> underperform the averages both financially and operationally over the very
> long term - the losses (which may be just profits smaller than average)
> will be borne by stockholders. The mergers and restructurings of the 1980s
> were debt-financed, and left behind a burden when things soured from
> 1989-92, which led to record levels of corporate bankruptcy.
> Corporate debt
> is rising again, to finance stock buybacks, but it's not as bad
> as the late
> 1980s.
>
> One reason that mergers don't do as well as their promoters hope is that
> they're ways of withdrawing capital from maturing industries. They provide
> the exit that Brenner said didn't happen today.
>
> Doug
>